Latest News surrounding Insurance Antitrust Litigation

California’s managed-care regulator announced Wednesday it has fined insurance giant Anthem Blue Cross $5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.

“Anthem Blue Cross’ failures to comply with the law surrounding grievance and appeals rights are long-standing, ongoing and unacceptable,” said Shelley Rouillard, director of the Department of Managed Health Care. “The plan must correct the deficiencies in their grievance and appeals system and comply with the law.”

Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002.

The state said it identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

“We find that the majority of U.S. commercial health insurance markets are highly concentrated,” the report concludes. “Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers between health insurers.”

(Reuters) – U.S. health insurer Anthem Inc’s Chief Executive Joseph Swedish will step down and be succeeded by industry veteran Gail Boudreaux, the Wall Street Journal reported on Friday, citing people with knowledge of the matter.

It is unclear how quickly the transition will occur, but the plan is expected to be announced as soon as next week, the publication reported.

Anthem, the nation’s second largest health insurer by revenue, did not respond to requests for comment.

Boudreaux is well-known among managed-care investors and has served as CEO of United Healthcare, a unit of the largest U.S. health insurer UnitedHealth Group Inc.

By : Anna Wilde Mathews

The Wall Street Journal

Anthem Inc.’s Chief Executive Joseph R. Swedish will step down, and the insurance giant will name veteran managed-care executive Gail K. Boudreaux as its next leader, according to people with knowledge of the matter.

It wasn’t immediately clear how quickly the transition will occur, but the plan is expected to be announced as soon as next week, the people said. Mr. Swedish is expected to keep his title as chairman for a transition period, one of the people said.

On Thursday, President Donald J. Trump signed an Executive Order promoting healthcare choice and competition across the United States in the Roosevelt Room of the White House. The President was joined by Secretary of the Treasury Steven Mnuchin, Secretary of Labor Alexander Acosta, Administrator of the Small Business Administration Linda McMahon, Acting Secretary of Health and Human Services Don Wright, members of Congress, and healthcare and business executives.

President Trump is preparing an executive order to allow people to purchase health insurance across state lines, a reform conservatives have long championed as a way to bring costs down and stir greater competition in the national marketplace.

The executive action gives the White House a chance to follow through on at least one promise related to healthcare reform after Senate Republicans’ second attempt to overhaul Obamacare failed this week. Kentucky Sen. Rand Paul first mentioned the action during a TV appearance Wednesday morning, saying Trump was considering taking matters into his own hands.

“I think there’s going to be big news from the White House in the next week or two, something they can do on their own,” Paul told MSNBC, adding that Trump “can legalize on his own the ability of individuals to join a group or a health association across state lines and buy insurance.”

State regulators slapped Blue Cross Blue Shield of Alabama last month with an $8 million penalty for charging rates that differed from those approved by the Alabama Department of Insurance from 2005 to 2013.

The charges investigated by the department occurred in about 1,400 plans issued to small group employers – those with two to 50 employees – and some COBRA plans for former employees. Company officials have said the rate variations were tied to a policy that was intended to reduce the shock of large rate increases and resulted in savings for most customers. However, attorneys suing the company for alleged anti-trust violations said the practice violated state laws that require rates to be filed and approved by insurance regulators.

“The goal was to smooth rate adjustments over time and provide small employers more predictability in their business planning,” according to a statement issued by Blue Cross Blue Shield of Alabama. “We believed these practices were beneficial overall to our small business customers.”

The rate variances resulted in undercharges of almost $107 million and overcharges of almost $33 million, according to the order issued on Aug. 16 by the Alabama Department of Insurance.

The department has been investigating Blue Cross’ small group and COBRA charges since February. The $8 million assessment, as it was described in the order, was levied because the company failed to inform the department of insurance about its methods for raising or reducing rates.

“Within 60 days of the date of this Order, Blue Cross shall pay the amount of $8,000,000 to the Commissioner of Insurance as an assessment for Blue Cross’ oversight in not filing its renewal rating methodology with the Department pursuant to [Alabama law],” the order read. “This assessment is a result of Blue Cross’ inability to reasonably conduct variance analysis outside of the study period due to incomplete data.”

TUPELO – North Mississippi Medical Center has filed suit against Blue Cross & Blue Shield of Mississippi, accusing the insurer of one-sided contract changes that have cost the Tupelo hospital $8 million so far this year.

The contract changes and other financial pressures, such as Medicare reimbursements, are forcing hospital administrators to look at potential expense reductions across the board.

“This is not about rate negotiations,” said Shane Spees, chief executive officer for North Mississippi Health Services, the parent organization for the Tupelo hospital. “This is about unilateral changes to the contract.”

Thousands of subscribers at Blue Cross and Blue Shield of Minnesota now face the likelihood of higher costs for care at Children’s Minnesota after the largest health plan in the state and Minnesota’s biggest pediatric hospital failed to agree on a new contract.In statements Wednesday announcing the termination of their previous contract, officials with Eagan-based Blue Cross and Minneapolis-based Children’s left open the possibility that an agreement might still be reached that restores in-network status for the pediatric hospital.

But the parties offered no new details about how far apart they are, or how negotiations might progress in the coming days. For now, Children’s is out-of-network for people with Blue Cross coverage, a distinction that could add thousands or tens of thousands of dollars to a family’s medical spending if they stick with Children’s.

“I am at a loss to think of an actual termination” like this in Minnesota, said Roger Feldman, a health economist at the University of Minnesota.

“Blue Cross is Children’s biggest customer, and conversely Children’s is the dominant pediatric provider of hospital care,” Feldman said. “It seems that neither party can get along without the other one.”

Blue Cross, which is the largest health insurer for Minnesota residents, says about 66,000 subscribers have received care at Children’s during the past year.

The terminated contract set Blue Cross payment rates to Children’s for services delivered to patients with commercial health insurance coverage, as well as those with coverage via the Medicaid program. Since the dispute went public in March, much of the discussion has focused on Medicaid, the public health insurance program for lower-income residents that’s jointly funded by the state and federal governments.

MINNEAPOLIS – A Minnesota health insurance company and the state’s largest pediatric hospital system failed to meet a deadline for a new contract, which could result higher rates for about 66,000 patients.

Children’s Minnesota and Eagan-based Blue Cross and Blue Shield of Minnesota (BCBS) could not make a deal before the July 5 deadline, making Children’s Minnesota an out-of-network provider for Blue Cross patients.

“We find it disappointing that Children’s would choose to walk away from our network instead of working with us collaboratively to negotiate a new agreement,” said Garrett Black, senior vice president of health services at Blue Cross, in a statement.

“Blue Cross gave Children’s an impossible ultimatum, knowingly threatening our ability to care for the kids and families that rely on us every day and the vitality of our organization,” said Bob Bonar, CEO at Children’s Minnesota, in a statement. “We’re disappointed that Blue Cross has been unwilling to find common ground given the scale and scope of vital pediatric services that we provide in this community.”